Supermarkets go to war

This time it's serious. After the shock lowering of the price of oil, Asda, smelling blood, were quick to react and slash the price of petrol in the forecourts. Now Tesco have got wind of the price cutting tactic and seem set to follow suit, and today are cutting fuel prices by 2p across most of its forecourts.

The drop in crude oil prices has spread concern throughout the world about the stability of the economic recovery, but has at least provided temporary respite for consumers. Asda and Morrisons made similar 2p cuts last week.

Independent petrol station owners are in the meantime struggling to keep up with the supermarkets, and claim that the supermarkets increasingly seem happy to make a loss in order to lure in grocery customers.

Brian Madderson, of RMI Petrol, which represents 6,000 independently owned forecourts, said: 'I think this level of loss-leading is a new phenomenon. The wholesale prices we are buying at is staying higher than one would expect … We don't understand why, and it is one of the things we have called for government to look at.' He said that at the rate things are going, parts of the country could end up as 'rural fuel deserts.'

Meanwhile an AA spokesperson welcomed the move by Tesco: 'It's good news when Tesco moves – the average price across the UK tends to come down very quickly as a result,' he said.

And with Brent crude oil dropping from $117 (£72) a barrel at the start of this month to $103, before recovering to close the week at $108, more prices cuts could be in store.

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